2021 (1) TMI 863 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute - HELD THAT - It is noticed that the Petitioner Corporate Applicant has submitted all relevant particulars and information, supported by document, to meet the requirement of the I B Code. Hence the present Petition is found complete and its filing is found in order in all respect. Application admitted.

Summary

Issues:
1. Corporate Insolvency Resolution Process under the Insolvency & Bankruptcy Code, 2016.
2. Financial distress and inability to pay creditors.
3. Legal proceedings initiated by vendors.
4. Mounting interest on loan amount.
5. Outstanding dues to Government of India.
6. Compliance with filing requirements.

Corporate Insolvency Resolution Process (CIRP):
The Company Petition was filed by the Corporate Applicant under section 10 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of CIRP due to financial distress. The Petitioner highlighted the accumulated receivables from debtors, outstanding debts to creditors, and the inability to clear debts due to a stressed financial condition. The Petition included relevant documents such as financial statements, board resolutions, and creditor details, meeting the filing requirements of the Code.

Financial Distress and Inability to Pay Creditors:
The Corporate Applicant faced severe financial challenges, including mounting debts, unpaid salaries to employees, and outstanding vendor bills. Legal proceedings were initiated by vendors to recover dues, leading to the arrest of the company's vessel under Admiralty Law. Despite efforts to repay debts, the financial situation remained precarious, impacting the company's ability to meet basic liabilities and revive its operations.

Mounting Interest and Government Dues:
The Petitioner highlighted the mounting interest on the loan amount, further adding stress to its financial status. Additionally, the company owed significant amounts to the Government of India towards TDS and GST dues. These outstanding financial obligations contributed to the overall financial distress faced by the Corporate Applicant.

Legal Proceedings Initiated by Vendors:
Vendors filed a petition before the High Court of Bombay under Admiralty jurisdiction to arrest the company's vessel for recovering outstanding dues. The company was forced to pay substantial amounts to vendors and fuel bills to release the vessel, disrupting income generation and exacerbating financial woes. These legal actions by vendors significantly impacted the company's financial stability.

Compliance and Admission of Petition:
Initially, the Company Petition was not admitted due to certain defects, and the Petitioner was given a deadline to rectify the issues. After rectification and subsequent hearings, the Tribunal found the Petition complete and in order. The Tribunal admitted the Petition, pronounced a moratorium under section 14 of the Code, and appointed an Interim Resolution Professional to oversee the CIRP process. The order of moratorium was to remain in effect until the completion of the resolution process or liquidation approval, as per the Code's provisions.